Medicare: Reform may cost seniors

A Medicare official concedes that seniors may have to dig deeper into their wallets next year thanks to the health care law.

The new analysis obtained by POLITICO finds the health care overhaul will result in increased out-of-pocket costs for seniors on Medicare Advantage plans.

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Richard Foster, the actuary for the Centers for Medicare and Medicaid, also tells Senate Republicans that the overhaul will result in “less generous benefit packages” for Medicare Advantage plans next year. Foster is independent from the administration and non-partisan.

But Republicans say dramatic changes to the program mean some seniors won’t be able to keep their plans – a promise President Barack Obama made during the reform debate – and the GOP has made the issue part of its attempt to roll back the health law.

Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Finance Committee, says the administration is trying to downplay the effects of the overhaul on the Medicare Advantage plans.

“Painting a rosy picture of Medicare Advantage options denies the facts from the government’s own chief actuary,” he said in a statement to POLITICO. “And it’s a disservice to the 11 million current beneficiaries who count on this popular program.”

Health and Human Services Secretary Kathleen Sebelius says, in a separate letter sent recently to Grassley, the changes in the health care overhaul will end up strengthening the program.

“Next year, seniors will have new benefits, new protections against fraud, and better Medicare Advantage choices with meaningful differences at affordable premiums, and more beneficiaries will participate in the program,” she wrote.

Sebelius says that the remaining Medicare Advantage plans have higher standards to meet, stemming from a 2008 Medicare law. In addition, 99.7 percent of Medicare beneficiaries who have access to an Advantage plan this year will have it next year and that premiums are expected to decline by 1 percent next year.

Foster says the additional costs seniors face will be partially offset by other pieces of the law, including reduced cost sharing for Medicare Parts A and B, lower Part B premiums and the filling of the prescription drug donut hole.

Last week, Grassley’s office highlighted an error Sebelius made in a speech to a gathering of AARP members. She incorrectly said the number of Medicare Advantage plans would increase next year. HHS later changed the written copy of the speech online without highlighting the change, which angered Grassley.

“Despite making a limited correction last week to an earlier speech delivered in Florida, the administration refuses to set the record straight appropriately,” Grassley said.

“But a new letter from Medicare’s chief actuary is nonpartisan and indisputable. Seniors enrolled in Medicare Advantage will pay more out of their own pockets as a result of the new health care law. Their costs will go up by hundreds of dollars on average in the coming years, by $346 in 2011 to a high of $923 in 2017.”

CLARIFICATION: The cost estimate came from the office of the actuary for the Centers for Medicare and Medicaid, an independent, non-partisan office.

CORRECTION: Corrected by: MJ Lee @ 10/13/2010 01:00 PM
CLARIFICATION: The cost estimate came from the office of the actuary for the Centers for Medicare and Medicaid, an independent, non-partisan office.